Crisis could spell opportunity for Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) — at least this is what Citigroup thought of the top management changes last week at the world’s biggest contract chipmaker.
Contrary to most analysts’ view that the return of Morris Chang (張忠謀) as chief executive officer would prompt concern over the company’s long-term succession plan, Citigroup said the 78-year-old Chang would help re-energize TSMC, while former CEO Rick Tsai (蔡力行) might have his job back in a few years.
“We see Chang’s return as positive, not negative,” Citigroup analyst Andrew Lu (陸行之) wrote in a client note on Monday. “After earning very good credibility from the market, we believe Tsai might still be able return as CEO within three years.”
Last week, TSMC announced its board of directors had appointed Chang to replace Tsai as CEO and moved the latter to head a new division within the firm developing green energy business. The board retained Chang as chairman, TSMC said in a statement on Thursday.
While Chang last week dismissed speculation that Tsai’s “demotion” had anything to do with employee layoffs over the past few months, many analysts, including Pranab Kumar Sarmah of Daiwa Institute of Research (Hong Kong) Ltd, said this may have been one of the reasons behind the move.
Citigroup nonetheless viewed the layoffs as unavoidable amid the global economic downturn.
“We see the 5 percent layoff as a necessary evil for TSMC and for investors, as sales for 2009 and 2010 are expected to be down between 10 percent and 20 percent from 2008 levels,” Lu said in the note.
As TSMC owes much of its success in the past 20 years to the efforts of its founder, Chang, Citigroup believed his presence could prove equally effective during this transition.
“We believe Chang can rebuild the centripetal force on employees after the recent layoffs,” Lu said. “He was never hands-off on major changes at TSMC in recent years, when Tsai was CEO.”
Tsai was appointed CEO at TSMC in 2005 and has been with the company for 20 years. He is now president of the firm’s New Business Development Organization, which is charged with developing solar cells and light-emitting-diode products.
“Up until now, we just do not know who would be more qualified than Tsai if Chang retired,” Lu said, adding that some senior managers could be reshuffled as well, without elaborating.
Chang is already 78 years old, nearly 20 years older than most CEOs in Taiwan’s high-tech sector. TSMC has a vice chairman, three senior vice presidents and 10 vice presidents at its executive level, the company Web site showed.
Citigroup said Chang could help navigate and push TSMC to increase its competitiveness in wafer manufacturing and other integrated circuit-related services, including at its wafer fabrication plant in China.
Eyeing China’s cheaper labor cost and bigger market potential, TSMC set up an 8-inch fab in Shanghai in 2003, while rival United Microelectronics Corp (UMC, 聯電) owns a 15 percent stake in Chinese chipmaker He Jian Technology (Suzhou) Co (和艦).
But as UMC’s board of directors agreed in April on a proposal to acquire the remaining 85 percent stake in He Jian, industry watchers have viewed the move — if it is successful — as a growing challenge to all chipmakers doing business in China, including TSMC.
“We believe Chang will refocus on the China fab, which was poorly run compared with that at He Jian,” Lu said.
Hon Hai Precision Industry Co (鴻海精密) yesterday said that its research institute has launched its first advanced artificial intelligence (AI) large language model (LLM) using traditional Chinese, with technology assistance from Nvidia Corp. Hon Hai, also known as Foxconn Technology Group (富士康科技集團), said the LLM, FoxBrain, is expected to improve its data analysis capabilities for smart manufacturing, and electric vehicle and smart city development. An LLM is a type of AI trained on vast amounts of text data and uses deep learning techniques, particularly neural networks, to process and generate language. They are essential for building and improving AI-powered servers. Nvidia provided assistance
DOMESTIC SUPPLY: The probe comes as Donald Trump has called for the repeal of the US$52.7 billion CHIPS and Science Act, which the US Congress passed in 2022 The Office of the US Trade Representative is to hold a hearing tomorrow into older Chinese-made “legacy” semiconductors that could heap more US tariffs on chips from China that power everyday goods from cars to washing machines to telecoms equipment. The probe, which began during former US president Joe Biden’s tenure in December last year, aims to protect US and other semiconductor producers from China’s massive state-driven buildup of domestic chip supply. A 50 percent US tariff on Chinese semiconductors began on Jan. 1. Legacy chips use older manufacturing processes introduced more than a decade ago and are often far simpler than
STILL HOPEFUL: Delayed payment of NT$5.35 billion from an Indian server client sent its earnings plunging last year, but the firm expects a gradual pickup ahead Asustek Computer Inc (華碩), the world’s No. 5 PC vendor, yesterday reported an 87 percent slump in net profit for last year, dragged by a massive overdue payment from an Indian cloud service provider. The Indian customer has delayed payment totaling NT$5.35 billion (US$162.7 million), Asustek chief financial officer Nick Wu (吳長榮) told an online earnings conference. Asustek shipped servers to India between April and June last year. The customer told Asustek that it is launching multiple fundraising projects and expected to repay the debt in the short term, Wu said. The Indian customer accounted for less than 10 percent to Asustek’s
Gasoline and diesel prices this week are to decrease NT$0.5 and NT$1 per liter respectively as international crude prices continued to fall last week, CPC Corp, Taiwan (CPC, 台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. Effective today, gasoline prices at CPC and Formosa stations are to decrease to NT$29.2, NT$30.7 and NT$32.7 per liter for 92, 95 and 98-octane unleaded gasoline respectively, while premium diesel is to cost NT$27.9 per liter at CPC stations and NT$27.7 at Formosa pumps, the companies said in separate statements. Global crude oil prices dropped last week after the eight OPEC+ members said they would
RSS